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Comparing the Impact of News: A Tale of Three Health Care Sectors
Author(s) -
Ewing Bradley T.,
Kruse Jamie B.,
Thompson Mark A.
Publication year - 2005
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.0306-686x.2005.00641.x
Subject(s) - volatility (finance) , health care , business , equity (law) , shock (circulatory) , monetary economics , marketing , public economics , economics , finance , economic growth , political science , medicine , law
This paper examines the impact of news on the volatility of equity returns in three sectors of the health care industry – health care service providers, producers of drugs and supplies, and third‐party payors. The news impact is found to be asymmetric in that bad news (i.e., a negative shock) has a significantly greater effect on volatility than good news. Intra‐industry differences in health care equity market performance are documented and are consistent with the fundamental attributes of these sectors including the degree of price and cost pressures facing firms, the physical capital requirements of firms, the search behavior of health care customers, and the presence of alternative market opportunities.